8206 Third Ave. Realty LLC v Resto

[*1] 8206 Third Ave. Realty LLC v Resto 2016 NY Slip Op 51821(U) Decided on December 20, 2016 Civil Court Of The City Of New York, Kings County Chinea, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 20, 2016
Civil Court of the City of New York, Kings County

8206 Third Avenue Realty LLC, Petitioner- Landlord,

against

Luis Resto, Respondent-Tenant.



76514/16



Slochowsky & Slochowsky LLP

26 Court Street, Suite 304

Brooklyn, NY 11242

(718)625-0987

Brooklyn Legal Services

105 Court Street, 4th Floor

Brooklyn, NY 11201

(718)233-6390
Daniele Chinea, J.

Procedural History:

This summary nonpayment proceeding was commenced on July 14, 2016. Respondent answered on July 20, 2016 and the case first appeared on the court's calendar on July 27, 2016. On that day Respondent entered into a stipulation with petitioner awarding it a final judgment in the amount of $5120.06 representing all rent owed through July 2016 at a monthly rate of $869.28. The petitioner was issued a warrant forthwith, execution was stayed through August 31, 2016 for payment of the arrears and August 2016 rent. The stipulation also called for certain repairs in the apartment.

Respondent was evicted on September 21, 2016 for failing to pay the arrears timely. The New York City Human Resources Administration ("HRA") paid $1842.88 on behalf of the respondent via two installments of $921.44 issued on August 10, 2016; not the $5120.06 agreed to in the stipulation. August rent was also paid by HRA. HRA had been paying respondent's full monthly rent since about April 2016.

On September 23, 2016, respondent filed an order to show cause seeking an award of possession and to be immediately restored, which was made returnable on September 26, 2016 (the "Post-Evict OSC"). On the return date, respondent appeared with counsel and the court was informed of a new tenant in the premises. The case was adjourned to October 7, 2016 for [*2]respondent to make a motion to add the new tenant to the proceeding.

On September 29, 2016, respondent's attorney filed a supplemental affirmation in support of respondent's Post Evict OSC arguing the default in payment was solely caused by HRA error. It also attached a copy of an email communication with an HRA employee dated September 27, 2016 indicating that respondent was approved for an additional $3913.38 to cover the arrears shortfall.

Respondent also filed an order to show cause, returnable October 7, 2016, seeking to implead the new tenant as a third-party respondent, vacate the warrant of eviction and judgment, restore respondent to possession, and pay to return respondent's possessions to the apartment; or, alternatively, grant respondent a judgment of possession as against petitioner and the third party respondent, which was signed. It also sought a stay on the new tenant taking physical possession of the subject premises or moving her belongings into or out of the premises (the "Impleader OSC").

On Friday, October 7, 2016, petitioner submitted opposition to the Post Evict OSC. The new tenant failed to appear in response to the Impleader OSC. She informed the court through a letter delivered by petitioner's attorney that she was unable to attend court proceedings on Fridays and asked for Wednesdays instead. Both OSC's were adjourned to Wednesday, October 19, 2016 for a hearing and for the appearance of the new tenant. The court sent a letter informing the new tenant of the adjourn date and how to get legal information or advice.

On October 19, 2016, all parties appeared. After a brief settlement discussion, respondent took the stand and the hearing began. Respondent's attorney was only able to conduct a few minutes of direct examination before the court had to stop the hearing to return to its resolution calendar. The hearing was adjourned to October 26, 2016.

On October 24, 2016, respondent interposed a second order to show cause, this one seeking to vacate the underlying stipulation of settlement claiming it was improvidently entered into by a pro se litigant, who did not have a full understanding of the defenses waived by settlement, and that the agreement was "manifestly unreasonable" because the judgment amount included sums already paid to petitioner by public assistance (the "Vacate OSC"). According to respondent, the defenses improvidently waived were that the rent demand failed to "clearly inform the tenant of the particular period which a rent payment is allegedly in default and the approximate good faith sum of rent assertedly due each such period," as required by law; and petitioner misapplied earmarked HRA shelter allowance payments to rent arrears instead of ongoing rent, as intended HRA. The court signed the Vacate OSC on October 25, 2016, made returnable the next day. A copy of the order to show cause was left at the address of the new tenant after two attempts at personal service. An affidavit of service was submitted on the return date.

On October 26, the court adjourned the proceedings to November 9, 2016 to give petitioner an opportunity to oppose the Vacate OSC in writing. The new tenant failed to appear on October 26 and the court granted the Impleader OSC on default to the extent of joining the new tenant as a party. A copy of the order was mailed to new tenant's address and petitioner was also asked to inform the new tenant of the next court date. The new tenant never came to court again after her initial appearance on October 19th.

On November 9, 2016, the court granted the Vacate OSC after argument, and the hearing [*3]proceeded with respondent again taking the stand and giving direct testimony. The court needed to stop the hearing before his attorney could complete its direct examination of him. On November 18, 2016, direct examination of respondent concluded. Petitioner conducted cross examination of respondent on November 23. On November 30, petitioner's property manager gave testimony and the parties rested. The Post Evict OSC and the Vacate OSC are consolidated for disposition herein.

Facts:

Respondent has been living in the subject apartment for 42 years. He moved in with his mother when he was 12 years old; he is now 54. He continuously lived there, with his mother, until her sudden passing in August 2015. At the time of her passing, respondent was a co-tenant with his mother on their rent stabilized lease. Respondent's mother had been receiving a SCRIE (Senior Citizen Rent Increase Exemption) allowing her to pay $673.27, instead of the registered legal rent of $864.28. The rent reverted back to $864.28 as of September 2016. HRA began paying respondent's rent in full in or around April 2016 and continues to do so to date. Respondent is provided this assistance due to a medical condition resulting in his disability.

Respondent tendered a personal check (No. 103) dated 12/8/15 in the amount of $870 and another personal check (#108) dated January 21, 2016 in the amount of $870 to petitioner. Check #103 was earmarked for December 2015 rent; check #108 was earmarked for January 2016 rent. For reasons never explored at the hearing despite the court's request for clarification of the issue, the checks were held until June 7, 2016. When petitioner attempted to negotiate them, they were refused by respondent's bank for insufficient funds. No testimony was elicited as to why the petitioner held respondent's checks for nearly six months before attempting to cash them.

Two days later, on June 9, 2016, petitioner drafted a rent demand seeking $3381.50 in rental arrears through June 2016, calculated as follows: $869.28 for the months of April 2016 - June 2016, $434.64 for the month of March 2016 and $169.51 for the months of September 2015 and October 2015. The demand did not reflect the bounced December and January payments. The demand was personally served on respondent on June 21, 2016, twelve days after it was drafted and two weeks after respondent's personal checks bounced.

On June 10, 2016, one day after the demand was drafted, petitioner cashed four HRA checks totaling $2173.20, paid as follows: (1) $434.64 issued June 3, 2016 for the period June 4 - June 18, 2016, (2) $434.64 issued May 18, 2016 for the period May 19 - June 3, 2016, (3) $434.64 issued on May 4, 2016 for the period May 4 - May 18, 2016, and (4) $869.28 issued April 26, 2016 for the period April 4 - May 3, 2016. HRA's payment records, submitted with respondent's Vacate OSC, indicate that each of the three $434.64 payments were intended to be semi-monthly shelter allowance payments; not arrears. The fourth payment, for $869.28, was intended to cover arrears for the period of April 4 - May 3, 2016. Petitioner, however, applied the payments to January, February and half of March per the demand. Petitioner denies being aware that the payments were earmarked for a particular opinion. Copies of checks attached to the Vacate OSC show that the checks do indicate on their face if they are meant as a rent supplement or for rent arrears. Check #4 for $869.28 indicates "Rent Only - for 2016/04/04 thru 2016/05/03." Checks #1 - #3, each for $434.64, state on their face "Rent supplement while on [*4]PA" and are each for exactly half of one month's rent.

The petition was drafted on July 6, 2016 and served upon respondent personally on July 12, 2016. The petitioner sought the exact same amounts as sought in the demand. Again the petitioner did not indicate that respondent's personal checks had bounced and an additional $1740 over the demand was due.

On July 27, 2016 respondent entered into the stipulation at issue. In court, petitioner was seeking $6,423.98 in arrears through July 2016, nearly doubling that sought in the demand and the petition. Respondent testified that he informed petitioner that he believed some public assistance payments had been made. Petitioner credited $1303.92, representing three payments of $434.64 issued by HRA, which the parties treated as half of June 2016 and the full rent for July 2016. These payments caused the stipulation amount to be reduced to $5120.06. The court attempted to listen to the allocution of the July 27th stipulation. Unfortunately, the recording system was malfunctioning that day and nothing was recorded for several hours, so no record was found by the court. It is unknown whether petitioner informed respondent on July 27th that his personal checks had bounced. Neither side elicited any testimony regarding the settlement discussion that lead to the July 27th stipulation, except for respondent's testimony that he informed petitioner of the uncredited HRA payments. The stipulation made no explicit mention of the bounced checks. Petitioner admits that it failed to give credit for a payment of $434.64, and the judgment should have been in the amount of $4685.26 not $5120.06.

Respondent went on July 27th to his case worker and requested the $5120.06 in arrears. He provided a copy of the stipulation and a ledger (Respondent's 1) to his worker. The ledger was admitted for the limited purpose of showing what respondent brought to HRA, and not for the truth of its contents, as respondent's counsel could not get beyond the hearsay objection. For reasons never made clear to the court, certified copies of HRA documents related to the request for arrears (respondent's 2) showed that HRA requested $1842.88, not $5120.06. On August 10, HRA issued two checks, each for $921.44, totaling $1842.88. An HRA representative was subpoenaed by respondent's counsel, but did not appear. Respondent's counsel did not seek to enforce the subpoena, therefore, the reasons why HRA requested and paid this lesser amount remain unknowable. Petitioner did not cash the $1842.88 in arrears checks, nor the August shelter payments, until September 2, 2016, after expiration of the stay on execution of the warrant. The reasons why petitioner held these checks were also never explored by either side.

On direct examination, respondent was shown respondent's 2, and testified that he had seen the documents before at the agency office, that he had received a copy of the approval (which indicated that HRA would only pay $1842.88) and the client receipt. Under cross examination, respondent indicated the only form he received from public assistance was the client receipt, which he gets whenever he has an appointment with the agency. The client receipt does not indicate the amount of arrears sought or approved. In explanation of this discrepancy on redirect, respondent admitted that he wasn't sure what he was signing, or what was presented to him at the July 27th appointment. He testified that all the documents start to look the same to him, he just signed and believed that the agency would pay the arrears agreed to in the stipulation. He believes he got the client receipt because that was the general practice of the agency to provide a receipt at the end of any appointment.

Respondent credibly testified he spoke with his case worker about the arrears payment [*5]during a home visit in mid-August and was told everything was paid. Again, at the end of August 2016, respondent asked a different case worker to check on the payments. Respondent testified that the case worker showed him a computer screen with a list of issued checks, all of which appeared cashed. Again respondent was lead to believe the arrears were paid. At no time did the respondent or the workers engage in any specific calculation of the amount paid. Respondent never testified, nor it is alleged, that he asked petitioner if it had received the payments.

Respondent was evicted on September 21, 2016. Respondent testified that he never saw a marshal's notice and fully relied on the agency's assurances that the money was paid. He testified there was a marshal's notice in with his mail, which he picked up on September 21, but didn't notice it until it was too late to do anything about it because the marshal was already at his door. It is unclear when the notice was actually received. Petitioner's attorney provided that the Marshal was contacted September 6, 2016 to go ahead with the eviction.

On September 22, 2016, petitioner entered into a rent stabilized lease for the subject apartment with the new tenant. That lease was back-dated to September 1, 2016 (petitioner's A). Petitioner's managing agent testified that they found the new tenant through applications they keep in the rental office and the application indicated the new tenant was seeking a two bedroom apartment. When the subject premises became available, they called her and she came right down to the managing office, signed the lease, and tendered $2587.40 for the first month and security in cash. A receipt was provided and entered into evidence by petitioner (petitioner's B). The witness did not have a copy of the new tenant's application with him in court. No testimony was elicited about whether the new tenant was ever shown the apartment prior to agreeing to rent it.

On September 23, 2016, the court signed respondent's Post Evict OSC, which ordered a stay on the re-letting of the premises and the removal of respondent's possessions. On September 24, 2016, petitioner removed respondent's possessions from the apartment in violation of this court's order and put them in storage. Respondent submits his copy of the Post Evict OSC with a date and time stamp indicating it was received by petitioner's attorney on September 23, 2016 at 4:32 pm (respondent's 3). Petitioner claims that it was unaware of the court's order when it removed respondent's property.

On September 26, 2016, respondent applied to HRA for the remaining arrears and received an approval for the same on September 27. Since September 27th, respondent has been able to pay the balance owed under the July 27th stipulation. September rent payments were paid to petitioner directly by HRA.

No testimony was elicited regarding how the petitioner keeps its book or records, or how it accounts for payments received. It is alleged in the moving papers that petitioner applies payments to the oldest arrears on account, but did not explain why HRA payments were applied to November 2015 forward rather than the small balances owed for the months of September & October 2015 even though those were the earliest arrears balances on account. The petitioner also explains that the amount sought on July 27th was more than sued for because it took into account the $1740 in bounced checks. No testimony was elicited as to why that $1740 was not accounted for in the demand or the petition, considering the checks bounced before either of those documents were drafted or served. Petitioner provided no testimony regarding why it [*6]applied check #103 for December's rent to respondent's November rent despite it being earmarked for December, and applied check #108 for January's rent to his December rent despite it being earmarked for January rent.

The property manager testified that the new tenant has not asked for her deposit or first month's rent back and he, therefore, assumes she is still interested in that apartment despite her failure to appear in these proceedings, except on October 19.

Decision:

Respondent's OSCs are granted. Respondent is awarded a judgment of possession as against petitioner, and shall be immediately restored to possession of the subject premises. Since the removal of respondent's belongings was in violation of this court's order, petitioner shall pay to return the removed property to the premises, and respondent is not responsible for the cost of the removal of his property on July 24th. Respondent is also not required to pay the petitioner's legal and marshal bills; the eviction was wrongful, as set forth below.

A rent demand must "fairly afford the tenant, at least, actual notice of the alleged amount due and the period for which such claim is made." Schwartz v Weiss-Newell, 87 Misc 2d 558, 561 (Civ Ct, NY Cty 1976) Here, the demand failed to meet this standard. It failed to apprise the respondent that his personal checks had bounced and the additional $1740 in arrears was owed. Petitioner was aware of this fact before the demand was drafted or served. A demand is not only a warning of impending law suit, it is an opportunity for respondent to pay any rent arrears in order to avoid litigation. See JD Realty Assoc v Jorrin, 166 Misc 2d 175 (Civ Ct, NY Cty 1995). Even if respondent had timely tendered that which was demanded in this proceeding, he could not have avoided litigation because that which was demanded was not all that was owed. Furthermore, without explanation (despite an explicit request for one), this court finds no reasonable basis for a landlord to hold personal checks for nearly six months. It is unreasonable to cash personal checks so long after tendered without a courtesy call to the account holder. It is especially troublesome in the case of an indigent tenant who depends upon HRA for payment of on-going rent in full, such as respondent.

Petitioner also misapplied payments to a period other than intended. It is a general principle that a payment of rent intended for a certain period must be applied to that period; a landlord is not entitled to apply tenant's earmarked checks as it sees fit. Shimon Realty Inc v Stosko NYLJ 6/24/02, 24:6 (Civ Ct King Cty 2002) (citing Kew Realty Co v Charles NYLJ 6/3/98, 27:2 (AT 2nd Dep't 1998). Here, petitioner had a practice of cashing checks whenever and applying payments however it saw fit even where the tendered payments were clearly earmarked. This occurred with both the HRA checks and respondent's personal checks. A demand is a predicate notice and, as such, cannot be amended. See JD Realty Assoc v Jorrin, 166 Misc 2d at 179. Thus, the proceeding is dismissed due to an insufficient demand without prejudice to recommence upon a proper demand, if necessary.

Even if the demand were found sufficient and the petition allowed to stand, the stipulation should be vacated. Respondent improvidently waived defenses related to the misapplication of funds and the sufficiency of the demand. Respondent was unrepresented at the time the stipulation was executed, while petitioner was represented by counsel. Moreover, petitioner admits that the money judgment entered is incorrect because it included $434.64 [*7]already paid by HRA (this is the shelter allowance check that petitioner applied to half of March in the demand and petition, and should have applied to half of January in the July 27th stipulation based upon its revamped application of HRA payments to cover respondent's bounced checks). A court has the power to relieve parties for the terms of a stipulation upon a showing of good cause, including collusion, mistake, accident, fraud; but also where an unrepresented litigant waives valid defenses or enters into an agreement that is patently unfair. See 144 Woodruff v Lacrete, 154 Misc 2d 301 (Civ Ct Kings Cty 1992). Respondent improvidently waived meritorious defenses without knowledge or legal counsel and even petitioner was mistaken as to what was owed on July 27th. These factors weigh in favor of vacating the stipulation and the resulting judgment and warrant.

Even if the demand and the stipulation were permitted to remain, the Post Evict OSC should be granted. The equities in this proceeding favor respondent being restored to possession, even though respondent failed to establish that HRA made an error [FN1] as alleged in the Supplement to respondents Post Evict OSC. Respondent promptly sought the arrears agreed to, going the same day that he signed the stipulation to his case worker to request assistance. Respondent has a long-term tenancy (42 years) and is disabled. The apartment is rent-regulated and affordable. There is little likelihood of future defaults as all on-going rent will be paid by HRA. The default was inadvertent on the respondent's part; he credibly testified that he was pacified by two different caseworkers' assurances that the debt had been paid - and such inquiries were made before the time to pay had expired. And, the balance of payment due was quickly made available once default was apparent. HRA approved the balance of arrears on September 27, six days after respondent was evicted, one day after the arrears were requested. Courts have indicated that where factors such as these exist, they weigh in favor of restoration. See, e.g., 2242 Clarendon Realty LLC v Etienne, 45 Misc 3d 132(A) (AT 2nd Dep't 2014); Winthrop Realty LLC v Menal, 21 Misc 3d 141(A) (AT 2nd Dep't 2008); Equity LLC v Ottley, 14 Misc 3d 126(A) (AT 2nd Dep't 2006); and Hancock Assoc LLC v Gomez, 2005 NY Misc LEXIS 3402 (Civ Ct Kings Cty 2005).

The court finds the new tenant forfeited her claim to the premises by coming to court only once after repeated notifications. She also never took actual possession of the premises due to the stays in the Impleader OSC. That she has yet to seek a refund of her deposit is not sufficient to overcome respondent's significant claim to the premises, having resided there for 42 years. Therefore, respondent is awarded a judgment of possession against new tenant, Olympia Zivanovic, issuance of the warrant is forthwith, no stay on execution.

This is the decision and order of the court. A copy will be mailed to the parties at the addresses below. Parties may pick up exhibits in Part A within 30 days of the date of this decision or they will be disposed of pursuant to Court Directives.

Dated: December 20, 2016

New York, NY

Daniele Chinea, J.H.C. Footnotes

Footnote 1:Respondent failed to produce a representative from HRA to testify as to how the decision was made to approve only $1842.88 in arrears. The certified HRA documents do not provide insight into how their determination was made.